Cyient - Strong Execution To Sustain The Performance: Motilal Oswal

Motilal Oswal Report

We recently met the management of Cyient to get a sense of the demand amid emerging macros. The management was quite optimistic on sustaining the growth outlook and margin profile, while emphasising its commitment to deliver within the guided range.

Overall, we remain constructive on the growth story of Cyient and its current positioning across verticals. We believe that-

1. Cyient’s core service business has stabilised and has joined the upward trajectory with 12.1% YoY constant currency growth in FY23.

2. FY23 robust book-to-bill of 1.3 times (core service) provides strong revenue visibility for FY24.

3. The company’s strategic investments in strengthening capabilities should contribute meaningfully in terms of growth for FY24E/FY25E, and

4. it is doubling down on its costrationalisation efforts to improve service margin, while flexing some of the key levers to achieve 100-200 basis point YoY improvement in FY24.

We have not made any changes to our estimates and building in 18% YoY and 14% YoY CC growth with an operating margin of 13.9%/14.1% for FY24/FY25.

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